Magashule and Co fear IMF bailout will loosen their ‘mafia-like grip’ on SA – Mashaba

Ace Magashule. Picture: Jacques Naude / African News Agency (ANA)

The People’s Dialogue founder has slammed the tripartite alliance for trying to prevent the finance minister from turning to the World Bank and IMF for a bailout.

Former Johannesburg mayor and founder of the People’s Dialogue Herman Mashaba said on Tuesday that he could scarcely believe the ANC’s tripartite alliance partners, the SA Communist Party (SACP) and labour federation Cosatu, as well as ANC secretary-general Ace Magashule, had publicly rejected any moves to seek funding from the International Monetary Fund (IMF) and the World Bank.

He called their stance “beyond imagination”.

South Africa has been facing a looming economic crisis after being downgraded to sub-investment, “junk” grade by all three major ratings agencies, with Moody’s the last to turn the knife last week.

The country is also in need of urgent funding to fight the coronavirus outbreak during a lockdown period that has slowed the national economy to a crawl and threatens the loss of hundreds of thousands of jobs.

The three secretaries in the alliance – the ANC’s Magashule, the SACP’s first deputy secretary Solly Mapaila and Bheki Ntshalintshali of Cosatu – expressed apparent unhappiness with Finance Minister Tito Mboweni and his plans to approach the IMF.

Without mentioning him by name, they said his public comments suggested he was willing to hand over the country’s sovereignty to the IMF.

“The secretariat is very concerned by the suggestions, conveyed through the minister of finance, that South Africa should approach the IMF or the World Bank for ‘assistance’,” they said in a statement on Monday.

“The suggestion is rejected. Instead, the secretariat reaffirms the need to safeguard South Africa’s democratic national sovereignty, the fundamental right to self-determination [and] our independence — which are non-negotiable, even in the midst of a crisis.

Mboweni had earlier told the Sunday Times that South Africa might approach the IMF and World Bank for funding to fight the coronavirus.

The secretariat rather wanted government to get the Reserve Bank to play a bigger role in the country. They also wanted South Africa to look into taking industrial retirement funds to navigate the crisis, and they called for the Brics development bank – funded by Brazil, Russia, India, China and South Africa – to get involved, among numerous other demands.

Mashaba, however, said their letter allegedly had dubious motivations, including that it would make it harder for the ANC and its partners to be corrupt due to the stringent measures and conditions that would come with any IMF funding.

“The only logical explanation for their opposition is because they know that the funding will require our government to adopt a number of necessary reforms that will ultimately weaken the mafia-like grip of organised labour over our economy,” said Mashaba, who called on President Cyril Ramaphosa to do “what is best for South Africans” and “denounce these irresponsible remarks by his alliance partners and put our economy before party political interests”.

Mashaba said the SACP and Cosatu’s move should anger the country. He said South Africa was now “tragically dependent on the support of institutions like the IMF, largely because of the stranglehold they [the SACP and Cosatu] have had over the ANC”.

Herman Mashaba addresses the media at a press conference at the Johannesburg city council, 21 October 2019. Picture: Tracy Lee Stark.

Mashaba, a longtime businessman and proponent of free market principles, said that South Africa’s economic and financial policies had for years been “a muddied mess of compromises between these tripartite alliance partners, and South Africans have had to foot the bill”.

“Arising from these downgrades, South Africa will be expelled from the FTSE World Government Bond Index, limiting where we can borrow from in the future. Our economy will bleed potentially trillions of rands, more people will lose their jobs, more businesses will go under and the pensions of ordinary people will be hammered further.

“In the downgrades by both Moody’s and Fitch, South Africa’s rigid labour regulations and economic policy ambiguity were cited as key reasons for the downgrades. The issues cited by these rating agencies were matters that have been cited as warnings for a decade now.

“The level of arrogance displayed by Cosatu and the SACP is beyond imagination, to try to dictate how and from where South Africa will receive funding, when their unhealthy influence over government has largely put us in the position where we have few potential funding options left.”

He pointed out that Mboweni had reportedly said in response: “If not the IMF, then give me the money. I cannot eat ideology.”

Mashaba said weakness in the ruling party, paralysed by factionalism, meant the ANC was incapable of telling Cosatu and the SACP “where to get off”.

Magashule’s involvement, he said, “only serves to prove the extent to which factionalism within the ANC has gotten us to this point, and how the outcomes of the Nasrec elective conference threaten to undermine our country’s efforts to correct”.

“South Africa faces a mammoth task to claw its way back both financially and economically. It is going to require the strongest leadership to lead us out of the mess that we have been put into. It is going to require leadership that puts the like of Cosatu and the SACP in their place – not as directors of government but as interest groups to be engaged like any others.

“This brings into question whether the Zondo Commission on State Capture ought not to summon the tripartite alliance partners before it. After all, who voted for the SACP and Cosatu to give them the power to influence economic and financial policy in South Africa? When you study the definition of state capture, it is not so far-fetched.”

Mashaba called on all South Africans to reject the irresponsible statement by the SACP and COSATU and to make sure Ramaphosa supported his finance minister to put the country ahead of his party and take “the tough decisions required to turn our country around”.

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